XPO Logistics (XPO)

Jul 8, 2022Trade Ideas

At less than $50, XPO Logistics (XPO) has become incredibly oversold.

Technically, XPO is over-extended on RSI, MACD, and Williams’ %R. The stock is also sitting at double bottom support dating back to August 2020. Fundamentally, it’s trading with an undervalued PEG ratio of just 0.73, and less than half of sales.

Even Morgan Stanley believes XPO is oversold.

Morgan Stanley analyst Ravi Shanker upgraded XPO Logistics to Overweight from Equal Weight with an unchanged price target of $75. The analyst says the shares are “too cheap to ignore.”. The analyst believes both concerns are more than priced in at the current nine-times price-to-earnings ratio “with catalysts to come.” XPO shares appear to be reflecting steady state earnings would get cut in half, which can only happen if the macro environment is significantly worse than Morgan’s base case or execution deteriorates, “both of which is unlikely.”

From a current price of $48.46, we’d like to see the stock again challenge $57.50, near-term.

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